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Couche-Tard Responds to Quarterly Results

In the coming year, company will address contraband cigarettes and high credit card fees.

September 4, 2008, 08:00 pm

LAVAL, Quebec -- On the heels of a weak quarterly report, Couche-Tard held a conference where it outlined its plans for the remainder of 2008 and into 2009, which focused on the challenges the chain is seeing and how it will overcome them.

"This was a quarter full of roadblocks which we consider as challenges that will certainly help us get stronger and better," said company President and Chief Executive Officer Alain Bouchard, who said he plans to remain with the company for the next 10 years, The Globe and Mail reported.

Bouchard said the company’s quarterly performance was strong despite various hurdles. "The U.S. market is still fragile, and it’s going to stay [that way] for a number of quarters," he said during the meeting.

"We think we can improve sales overall, both in Canada and the U.S., although we know that in some markets it’s going to be tough," said company CFO Richard Fortin.

On the acquisition front, Couche-Tard expects continued growth in its business, which covers 33 U.S. states and all 10 Canadian provinces.

The recent acquisition of Irving Oil locations in Canada and the U.S. will likely result in a small profit gain, analyst David Hartley of BMO Nesbitt Burns told the paper.

"I don’t think it will be a huge increase in profitability over last year, but it will be a tough year for them one way or another, whether they beat last year’s number or not," he told The Globe and Mail.

In response to soured investors, Bouchard said the company intends to address contraband cigarettes and high credit card fees.

Annual credit and debit card fees paid by Couche-Tard climbed from $63 million three years ago to $151 million last year. This has overshadowed improvements, according to Bouchard, who added the charges are "exorbitant" and "unjustified."

With an estimated one-third of the cigarettes sold in Ontario last year deemed illegal, Couche-Tard, which sells only legal products at its 5,395 stores in Canada and the U.S., is being penalized, as are taxpayers, Bouchard said.